A 3% Shiseido Sales Decline Masks a Profit Rebound
Shiseido opened the year with a mixed picture: net sales slipped 3% to ¥232 billion in the first quarter compared with the same period last year, yet operating profit surged 58% to ¥13 billion. The Shiseido sales decline was driven by softer demand in key markets, timing shifts across several brands and inventory adjustments, but disciplined cost control and portfolio mix helped deliver stronger profitability. By brand, performance was uneven. The flagship Shiseido line fell 4%, prestige label Clé de Peau was down 2% and suncare brand Anessa dropped 17%. In contrast, colour cosmetics label NARS grew 7%, Elixir rose 4% and Drunk Elephant edged up 1%. Regionally, the company reported a 5.1% sales increase in the US to ¥29.6 billion, helped by robust demand for Shiseido’s Vital Perfection and a return to growth for NARS, even as other regions lagged.
Geopolitics Hits Beauty: From China-Japan Tensions to Middle East Risks
The beauty industry geopolitical impact is becoming impossible to ignore, and Shiseido is a case in point. The group linked part of its first-quarter slowdown to ongoing tensions between Japan and China, which intensified after comments by Japan’s prime minister in late 2025 regarding a potential response to any invasion of Taiwan. These strains contributed to a 1% decline in the company’s China and travel retail segment, underscoring how diplomatic friction can quickly erode demand for luxury brands. At the same time, Shiseido is tracking fallout from conflict in the Middle East, warning of raw material and logistics cost pressures, as well as supply chain risks such as production delays. For a global luxury player reliant on complex sourcing and cross-border distribution, these overlapping flashpoints illustrate how regional conflicts can morph into systemic luxury brand market challenges, even when overall global demand for beauty remains resilient.
Drunk Elephant Recovery Highlights Selective Brand Strength
Amid broader pressure, Shiseido’s portfolio shows pockets of resilience, most notably a tentative Drunk Elephant recovery. The embattled skin care brand still posted a 14% sales drop in the quarter, yet Shiseido highlighted that the pace of decline has narrowed, and separate figures showed a 1% year-on-year uptick under a different brand classification, signalling early stabilisation. Drunk Elephant has been rebuilding after an identity crisis triggered by the 2024 “Sephora Kids” drama, when tweens’ overuse of high-active products sparked backlash and negative publicity. To reset, the brand introduced a new campaign and direction in January 2026, coupled with a strategy focused on brand ambassadors, partnerships and a creator community to generate advocacy. Shiseido also aims to regain leadership via “unrivalled” hero products. This selective strength underlines how, even during a Shiseido sales decline, individual labels can rebound if repositioned carefully.
Restructuring, Factory Closures and Potential Price Hikes
Facing mounting beauty industry geopolitical impact and cost volatility, Shiseido is accelerating beauty brand restructuring and broader operational changes. The company plans to optimise its global production network by closing the Hsinchu factory operated by Taiwan Shiseido, shifting production to domestic facilities to enhance capacity utilisation and cost efficiency. This move aligns with its 2030 Medium-Term Strategy, which prioritises sustainable growth and maximising brand value. At the same time, Shiseido is monitoring rising raw material and logistics costs and has signalled that selective price increases are under consideration. For consumers, that raises the possibility that geopolitical strain and supply disruption will be felt at the beauty counter. For investors, the reshaping of manufacturing and pricing underscores how luxury brand market challenges are no longer only about demand cycles, but also about reengineering supply chains for an era of persistent political and economic instability.